Boggs v. Boggs

1997-06-02

Headline: ERISA pre-empts state community property rules allowing a nonparticipant spouse to leave interest in undistributed pension benefits, blocking heirs' claims and protecting surviving spouses' guaranteed annuities nationwide.

Holding: The Court held that ERISA pre-empts state laws that let a deceased nonparticipant spouse devise an interest in undistributed pension benefits, so Louisiana's community property transfer to the sons cannot reduce the surviving spouse's ERISA-guaranteed annuity.

Real World Impact:

Blocks heirs from using state succession rules to reduce surviving spouse's ERISA annuity.
Prevents testamentary transfers from creating enforceable interests in undistributed pension benefits.
Applies nationwide, affecting community property States and large pension assets.

Topics: pensions, ERISA preemption, community property, survivor annuities

Summary

Background

Isaac Boggs worked for South Central Bell from 1949 until his 1985 retirement and received a lump-sum rolled into an IRA, 96 shares of AT&T stock, and a monthly annuity. His first wife Dorothy died in 1979 and by will left a usufruct to Isaac and the naked ownership of two-thirds to their sons. A 1980 Louisiana judgment attributed a community property interest in a savings account to Dorothy’s estate. After Isaac died Sandra, his second wife, received the survivor annuity and the sons sought an accounting and a share of the plan distributions; Sandra sued claiming ERISA pre-empts the state succession claim.

Reasoning

The Court asked whether ERISA conflicts with a state law that lets a nonparticipant spouse transfer an interest in undistributed plan benefits by will and held that it does. ERISA requires a qualified joint and survivor annuity for a surviving spouse (§1055) and bars assignment or alienation of pension benefits (§1056(d)(1)). Allowing testamentary transfers could reduce the survivor’s guaranteed annuity and frustrate ERISA’s national scheme, and the QDRO exception did not validate the 1980 transfer here.

Real world impact

The ruling prevents heirs of a predeceased spouse from using state succession rules to cut a surviving spouse’s ERISA-protected annuity and restricts state community property claims affecting undistributed pension benefits. The opinion notes the decision touches nine community property States, about 80 million residents, and roughly $1 trillion in retirement plans, so many claimants and plans are affected.

Dissents or concurrances

Justice Breyer dissented, arguing Congress did not clearly intend ERISA to pre-empt testamentary community property transfers and that state accounting procedures could protect the surviving spouse’s annuity while allowing limited recovery by heirs.